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HMRC Still On Offshore Warpath

by Amanda Banks,, London

02 November 2010

Accountancy firm PKF has warned UK taxpayers with outstanding tax balances on Swiss accounts of the dangers of holding out for the conclusion of bilateral talks between Switzerland and the UK before making a declaration.

John Cassidy, tax investigation and dispute resolution partner at PKF, comments: “Since the talks were announced, we have heard of several major advisers who are effectively telling their clients to sit tight and wait for a future UK-Swiss deal before coming clean on UK tax arrears. This is poor advice and could leave their clients facing unnecessarily large tax bills."

“Those account holders who do sit tight must be made aware that there is a significant risk of HMRC discovering that they have underpaid or evaded tax: if an investigation is started it will be too late to use any amnesty. HMRC now has the funding to scale up its investigations against offshore account holders and has amassed a lot of data on offshore bank account holders generally. It has already shown it is willing to use stolen bank data to open investigations into Swiss account holders in an attempt to catch tax evaders.”

Cassidy further warned that a future tax amnesty for accounts based in Switzerland is possible, but its terms are unknown and it may be a long way off:

“The announcement is only that talks will start next year. Any deal may not be as generous as the current Liechtenstein Disclosure Facility (LDF) which is available if just a small proportion of Swiss funds are moved to that country so account holders need not give up their Swiss banking arrangements.”

Concluding, Cassidy opined: “It is much cheaper to put things right by owning up to tax irregularities than to only come clean when HMRC investigates your affairs. Many people can minimize the risks they face by creating a financial asset in Liechtenstein now to take advantage of the LDF at relatively low cost.”

TAGS: compliance | tax | investment | offshore confidentiality | tax compliance | tax avoidance | law | banking | Liechtenstein | United Kingdom | enforcement | offshore | offshore banking | banking secrecy | Switzerland | penalties

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